Tax Code File Maintenance, on the Accounts Receivable Set-up (SER) menu, is used to create and to maintain tax codes in calculating the sales tax during invoice processing.

A tax code per state, city, county, and locality must be set up correctly in this maintenance file to determine sales tax.  Tax Codes can be combined if necessary to establish Taxing Authority Master Codes that are assigned to each customer in the Customer Master File Maintenance M=More Data Screen.

Enter the tax code you want to create or enter a "?" to display the tax code preset for you.  The tax code is an alpha-numeric field with the maximum accepted characters being 3.

Example:  Ohio State Sales Tax 002.

DESCRIPTION

Enter the description of the tax code.  The maximum accepted characters being 25.

Example:  Ohio State Sales Tax

REPORTS TO

Enter the tax code that this reports to.

Example:   Summit County Sales Tax (Code 004) reports to, or pays taxes to, the state of Ohio which is Ohio State Sales Tax (code 002).

G/L ACCOUNT #

Enter the appropriate General Ledger account where accrued sales tax will update activity.  You may set up separate General Ledger accounts for individual tax codes if you choose.  These accounts would need to be set-up in the Chart of Accounts for the General Ledger before they can be accessed in this field.

TAX ON TAX

This field should be set to N.  It is only used for our Canadian customers.

CURRENT TAX RATE

Enter the current tax rate.

Example: 5 1/2 percent should be entered as 5.5 not .055.  Include the effective date and specify whether freight is taxable.

PENDING TAX RATE

Enter the pending tax rate if known.  Include the effective date and specify if freight is taxable.  The tax rate will automatically change the present tax rate to pending rate when it becomes current.

CREATING TAX CODES

Example:   Specialty Advertising Co., located in Akron, Ohio must set up their tax structure to calculate sales tax when doing business in Ohio.  The Summit County sales tax rate is currently .750 percent and reports to the State of Ohio.  The Ohio sales tax rate is 5.00 percent.

Additionally, a portion of Specialty Advertising Co.'s customer base is non-taxable.  In this case you must set up a tax code called Non-Taxable or Tax Exempt with a tax rate of .000 and a tax code of NTX.